Doing Business 2018

About
Doing Business
The foundation of Doing Business is the notion that economic activity benefits from ƒƒ Doing Business measures aspects of
clear and coherent rules: rules that set out and clarify property rights and facilitate business regulation affecting domestic
the resolution of disputes. And rules that enhance the predictability of economic small and medium-size firms defined
interactions and provide contractual partners with essential protections against based on standardized case scenarios
arbitrariness and abuse. Such rules are much more effective in shaping the incentives and located in the largest business city
of economic agents in ways that promote growth and development where they are of each economy. In addition, for 11
reasonably efficient in design, are transparent and accessible to those for whom they economies a second city is covered.
are intended and can be implemented at a reasonable cost. The quality of the rules
ƒƒ Doing Business covers 11 areas
also has a crucial bearing on how societies distribute the benefits and finance the
of business regulation across
costs of development strategies and policies.
190 economies. Ten of these
areas—starting a business, dealing
with construction permits, getting
Good rules create an environment where apply to firms at different stages of their electricity, registering property, getting
new entrants with drive and good ideas life cycle. The results for each economy credit, protecting minority investors,
can get started in business and where can be compared with those for 189 other paying taxes, trading across borders,
good firms can invest, expand and cre- economies and over time. enforcing contracts and resolving
ate new jobs. The role of government insolvency—are included in the
policy in the daily operations of domes- distance to frontier score and ease of
tic small and medium-size firms is a FACTORS DOING BUSINESS doing business ranking. Doing Business
central focus of the Doing Business data. MEASURES also measures features of labor market
The objective is to encourage regulation regulation, which is not included in
that is designed to be efficient, acces- Doing Business captures several impor- these two measures.
sible to all and simple to implement. tant dimensions of the regulatory
ƒƒ Doing Business relies on four main
Onerous regulation diverts the energies environment as it applies to local firms.
sources of information: the relevant
of entrepreneurs away from developing It provides quantitative indicators on
laws and regulations, Doing Business
their businesses. But regulation that is regulation for starting a business, deal-
respondents, the governments of the
efficient, transparent and implemented ing with construction permits, getting
economies covered and the World
in a simple way facilitates business electricity, registering property, getting
Bank Group regional staff.
expansion and innovation, and makes credit, protecting minority investors, pay-
it easier for aspiring entrepreneurs to ing taxes, trading across borders, enforc- ƒƒ More than 43,000 professionals in 190
compete on an equal footing. ing contracts and resolving insolvency economies have assisted in providing
(table 2.1). Doing Business also measures the data that inform the Doing Business
Doing Business measures aspects of features of labor market regulation. indicators over the past 15 years.
business regulation for domestic firms Although Doing Business does not pres-
through an objective lens. The focus of ent rankings of economies on the labor ƒƒ Doing Business data are widely
used by governments, researchers,
the project is on small and medium-size market regulation indicators or include
international organizations and think
companies in the largest business city of the topic in the aggregate distance to
tanks to guide policies, conduct
an economy. Based on standardized case frontier score or ranking on the ease of
research and develop new indexes.
studies, Doing Business presents quantita- doing business, it does present the data
tive indicators on the regulations that for these indicators.
12 DOING BUSINESS 2018
TABLE 2.1 What Doing Business measures—11 areas of business regulation
Indicator set What is measured
Starting a business Procedures, time, cost and paid-in minimum capital to start a
limited liability company
Dealing with construction permits Procedures, time and cost to complete all formalities to build a
warehouse and the quality control and safety mechanisms in the
construction permitting system
Getting electricity Procedures, time and cost to get connected to the electrical grid,
the reliability of the electricity supply and the transparency of tariffs
Registering property Procedures, time and cost to transfer a property and the quality of
the land administration system
Getting credit Movable collateral laws and credit information systems
Protecting minority investors Minority shareholders’ rights in related-party transactions and in
corporate governance
Paying taxes Payments, time and total tax and contribution rate for a firm to
comply with all tax regulations as well as post-filing processes
Trading across borders Time and cost to export the product of comparative advantage and
import auto parts
Enforcing contracts Time and cost to resolve a commercial dispute and the quality of
judicial processes
Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency
and the strength of the legal framework for insolvency
Labor market regulation Flexibility in employment regulation and aspects of job quality
How the indicators are selected Business indicators on getting credit and
The design of the Doing Business indica- getting electricity.
tors has been informed by theoretical
insights gleaned from extensive research Some Doing Business indicators give a
and the literature on the role of institu- higher score for more regulation and
tions in enabling economic development.1 better-functioning institutions (such as
In addition, the background papers devel- courts or credit bureaus). Higher scores
oping the methodology for each of the are given for stricter disclosure require-
Doing Business indicator sets have estab- ments for related-party transactions,
lished the importance of the rules and for example, in the area of protecting
regulations that Doing Business focuses minority investors. Higher scores are
on for such economic outcomes as trade also given for a simplified way of apply-
volumes, foreign direct investment, mar- ing regulation that keeps compliance
ket capitalization in stock exchanges and costs for firms low—such as by easing
private credit as a percentage of GDP.2 the burden of business start-up formali-
ties with a one-stop shop or through a
The choice of the 11 sets of Doing single online portal. Finally, Doing Business
Business indicators has also been guided scores reward economies that apply a
by economic research and firm-level risk-based approach to regulation as a
data, specifically data from the World way to address social and environmental
Bank Enterprise Surveys.3 These surveys concerns—such as by imposing a greater
provide data highlighting the main regulatory burden on activities that pose
obstacles to business activity as reported a high risk to the population and a lesser
by entrepreneurs in more than 131,000 one on lower-risk activities. Thus, the
companies in 139 economies. Access economies that rank highest on the ease
to finance and access to electricity, for of doing business are not those where
example, are among the factors identified there is no regulation—but those where
by the surveys as important to busi- governments have managed to create
nesses—inspiring the design of the Doing rules that facilitate interactions in the
marketplace without needlessly hinder-
ing the development of the private sector.
The distance to frontier and
ease of doing business ranking
To provide different perspectives on the
data, Doing Business presents data both for
individual indicators and for two aggregate
measures: the distance to frontier score
and the ease of doing business ranking.
The distance to frontier score aids in
assessing the absolute level of regulatory
performance and how it improves over
time. This measure shows the distance of
each economy to the “frontier,” which rep-
resents the best performance observed on
each of the indicators across all economies
in the Doing Business sample since 2005
or the third year in which data were col-
lected for the indicator. The frontier is set
at the highest possible value for indicators
calculated as scores, such as the strength
of legal rights index or the quality of land
administration index. This underscores
the gap between a particular economy’s
performance and the best performance at
any point in time and is used to assess the
absolute change in the economy’s regula-
tory environment over time as measured
by Doing Business. The distance to frontier
is first computed for each topic and then
averaged across all topics to compute the
aggregate distance to frontier score. The
ranking on the ease of doing business
complements the distance to frontier
score by providing information about an
economy’s performance in business regu-
lation relative to the performance of other
economies as measured by Doing Business.
Doing Business uses a simple averaging
approach for weighting component indi-
cators, calculating rankings and determin-
ing the distance to frontier score.4 Each
topic covered by Doing Business relates to
a different aspect of the business regula-
tory environment. The distance to frontier
scores and rankings of each economy vary,
often considerably, across topics, indicat-
ing that a strong performance by an econ-
omy in one area of regulation can coexist
with weak performance in another (figure
2.1). One way to assess the variability of
 ABOUT DOING BUSINESS 13

FIGURE 2.1  An economy’s regulatory environment may be more business-friendly in some areas than in others

Distance to frontier score (0–100) Average of highest three topic scores

Average of all topic scores
100 Average of lowest three topic scores
90
80
70
60
50
40
30
20
10
0
New Zealand
Denmark
Hong Kong SAR, China
United Kingdom
Georgia
Macedonia, FYR
Finland
Taiwan, China
Ireland
Latvia
United Arab Emirates
Iceland
Mauritius
Poland
Portugal
France
Switzerland
Russian Federation
Slovenia
Slovak Republic
Rwanda
Serbia
Romania
Armenia
Mexico
Croatia
Cyprus
Chile
Azerbaijan
Colombia
Costa Rica
Luxembourg
Albania
Greece
Morocco
Oman
El Salvador
Bhutan
Kyrgyz Republic
Kenya
South Africa
Malta
Samoa
Tonga
St. Lucia
San Marino
Seychelles
Guatemala
Dominican Republic
Fiji
Jordan
Nepal
Antigua and Barbuda
Papua New Guinea
Sri Lanka
Philippines
Honduras
Argentina
Bahamas, The
Belize
Tajikistan
Brazil
Cabo Verde
St. Vincent and the Grenadines
Nicaragua
Lebanon
Cambodia
Tanzania
Côte d'Ivoire
Lao PDR
Mali
Nigeria
Pakistan
Marshall Islands
Benin
Guinea
Micronesia, Fed. Sts.
Kiribati
Zimbabwe
Ethiopia
Cameroon
Suriname
Gabon
São Tomé and Príncipe
Myanmar
Equatorial Guinea
Angola
Bangladesh
Congo, Rep.
Haiti
Afghanistan
Libya
South Sudan
Eritrea
Source: Doing Business database.
Note: The distance to frontier scores reflected are those for the 10 Doing Business topics included in this year’s aggregate distance to frontier score. The figure is illustrative only;
it does not include all 190 economies covered by this year’s report. See the country tables for the distance to frontier scores for each Doing Business topic for all economies.

an economy’s regulatory performance is
to look at its distance to frontier scores
across topics (see the country tables).
Morocco, for example, has an overall
distance to frontier score of 67.91, mean-
ing that it is about two-thirds of the way
from the worst to the best performance.
Its distance to frontier score is 92.46 for
starting a business, 85.72 for paying taxes
and 81.12 for trading across borders. At
the same time, it has a distance to frontier
score of 34.03 for resolving insolvency, 45
for getting credit and 58.33 for protecting
minority investors.
FACTORS DOING BUSINESS
DOES NOT MEASURE
Many important policy areas are not
covered by Doing Business; even within the
areas it covers its scope is narrow (table
2.2). Doing Business does not measure the
full range of factors, policies and institu-
tions that affect the quality of an econo-
my’s business environment or its national
competitiveness. It does not, for example,
capture aspects of macroeconomic stabil-
ity, development of the financial system,
market size, the incidence of bribery and
corruption or the quality of the labor force.
The focus is deliberately narrow even
within the relatively small set of indica-
tors included in Doing Business. The time
and cost required for the logistical pro-
cess of exporting and importing goods
is captured in the trading across borders
indicators, for example, but they do not
measure the cost of tariffs or of interna-
tional transport. Doing Business provides a
narrow perspective on the infrastructure
challenges that firms face, particularly
in the developing world, through these
indicators. It does not address the extent
to which inadequate roads, rail, ports and
communications may add to firms’ costs
and undermine competitiveness (except
to the extent that the trading across
borders indicators indirectly measure
the quality of ports and border connec-
tions). Similar to the indicators on trading
across borders, all aspects of commercial
legislation are not covered by those on
starting a business or protecting minor-
ity investors. And while Doing Business
measures only a few aspects within each
area that it covers, business regulation
reforms should not focus only on these
aspects, because those that it does not
measure are also important.
Doing Business does not attempt to quan-
tify all costs and benefits of a particular
law or regulation to society as a whole.
The paying taxes indicators measure the
tax and contribution rate, which, in isola-
tion, is a cost to businesses. However, the
indicators do not measure—nor are they
intended to measure—the benefits of the
social and economic programs funded
with tax revenues. Measuring the quality
and efficiency of business regulation pro-
vides only one input into the debate on the
regulatory burden associated with achiev-
ing regulatory objectives, which can differ
across economies. Doing Business provides
TABLE 2.2  Examples of areas not
covered by Doing Business
Macroeconomic stability
Development of the financial system
Quality of the labor force
Incidence of bribery and corruption
Market size
Lack of security
14 DOING BUSINESS 2018

a starting point for this discussion and the largest business city, and learning with applicable regulations. In practice,
should be used in conjunction with other from local good practices, Doing Business entrepreneurs may not be aware of what
data sources. has complemented its global indicators needs to be done or how to comply with
with subnational studies (box 2.1). Also, regulations and may lose considerable time
coverage was extended to the second trying to find out. Alternatively, they may
ADVANTAGES AND largest business city in economies with a intentionally avoid compliance—by not
LIMITATIONS OF THE population of more than 100 million (as registering for social security, for example.
METHODOLOGY of 2013) in Doing Business 2015. Firms may opt for bribery and other infor-
mal arrangements intended to bypass
The Doing Business methodology is Doing Business recognizes the limitations the rules where regulation is particularly
designed to be an easily replicable way to of the standardized case scenarios and onerous—an aspect that helps explain dif-
benchmark specific aspects of business assumptions. But while such assumptions ferences between the de jure data provided
regulation. Its advantages and limitations come at the expense of generality, they by Doing Business and the de facto insights
should be understood when using the also help to ensure the comparability of offered by the World Bank Enterprise
data (table 2.3). data. Some Doing Business topics are com- Surveys.5 Levels of informality tend to
plex, and so it is important that the stan- be higher in economies with particularly
Ensuring comparability of the data across dardized cases are defined carefully. For burdensome regulation. Compared with
a global set of economies is a central example, the standardized case scenario their formal sector counterparts, firms in
consideration for the Doing Business usually involves a limited liability com- the informal sector typically grow more
indicators, which are developed using pany or its legal equivalent. There are two slowly, have poorer access to credit and
standardized case scenarios with specific reasons for this assumption. First, private employ fewer workers—and these workers
assumptions. One such assumption is limited liability companies are the most remain outside the protections of labor law
the location of a standardized business— prevalent business form (for firms with and, more generally, other legal protections
the subject of the Doing Business case more than one owner) in many economies embedded in the law.6 Firms in the informal
study—in the largest business city of the around the world. Second, this choice sector are also less likely to pay taxes. Doing
economy. The reality is that business reg- reflects the focus of Doing Business on Business measures one set of factors that
ulations and their enforcement may differ expanding opportunities for entrepreneur- help explain the occurrence of informality
within a country, particularly in federal ship: investors are encouraged to venture and provides policy makers with insights
states and large economies. But gather- into business when potential losses are into potential areas of regulatory reform.
ing data for every relevant jurisdiction in limited to their capital participation.
each of the 190 economies covered by
Doing Business is infeasible. Nevertheless, Another assumption underlying the DATA COLLECTION IN
where policy makers are interested in Doing Business indicators is that entre- PRACTICE
generating data at the local level, beyond preneurs have knowledge of and comply
The Doing Business data are based on a
detailed reading of domestic laws and
TABLE 2.3  Advantages and limitations of the Doing Business methodology regulations as well as administrative
Feature Advantages Limitations requirements. The report covers 190
economies—including some of the small-
Use of standardized Makes data comparable across economies Reduces scope of data; only regulatory
case scenarios and methodology transparent reforms in areas measured can be est and poorest economies, for which
systematically tracked little or no data are available from other
Focus on largest Makes data collection manageable (cost- Reduces representativeness of data sources. The data are collected through
business city a effective) and data comparable for an economy if there are significant
differences across locations several rounds of communication with
Focus on domestic Keeps attention on formal sector—where Unable to reflect reality for informal
expert respondents (both private sector
and formal sector regulations are relevant and firms are sector—important where that is practitioners and government officials),
most productive large—or for foreign firms facing a through responses to questionnaires,
different set of constraints
conference calls, written correspondence
Reliance on expert Ensures that data reflect knowledge of Indicators less able to capture variation
respondents those with most experience in conducting in experiences among entrepreneurs and visits by the team. Doing Business
types of transactions measured relies on four main sources of information:
Focus on the law Makes indicators “actionable”—because Where systematic compliance with the the relevant laws and regulations, Doing
the law is what policy makers can change law is lacking, regulatory changes will
not achieve full results desired Business respondents, the governments
of the economies covered and the World
a. In economies with a population of more than 100 million as of 2013, Doing Business covers business regulation
in both the largest and second largest business city. Bank Group regional staff (figure 2.2).
 ABOUT DOING BUSINESS 15

BOX 2.1 Subnational Doing Business indicators: regional-level benchmarking in the European Union
Subnational Doing Business studies point to differences in business regulation and its implementation—as well as in the pace of
regulatory reform—across locations in a single economy or region. For several economies, subnational studies are now periodi-
cally updated to measure change over time or to expand geographic coverage to additional cities. Six economies completed sub-
national studies this year: Afghanistan, Colombia, three EU member states (Bulgaria, Hungary and Romania) and Kazakhstan. In
addition, an ongoing study updated data for Nigeria.

With funding from the European Commission’s Directorate-General for Regional and Urban Policy (DG REGIO), the first of a
series of new subnational reports was launched focusing on the European Union member states. Doing Business in the European
Union 2017: Bulgaria, Hungary and Romania builds on subnational studies completed in Italy, Spain and Poland. The next study in
the subnational series will cover Croatia, the Czech Republic, Portugal and the Slovak Republic.

These studies will provide valuable input to individual country reports produced for the European Semester, the European Union’s
economic and fiscal policy coordination framework, and will be closely linked with the Lagging Regions initiative launched by the
European Commission in June 2015, which studies constraints to growth and investment in the European Union’s low-income
and low-growth regions.

Doing Business in the European Union 2017: Bulgaria, Hungary and Romania goes beyond the largest business cities of Sofia, Budapest
and Bucharest to benchmark an additional 19 locations. In total, the study measures business regulation in 22 locations—six in
Bulgaria, seven in Hungary and nine in Romania. The study benchmarks the locations using five Doing Business indicator sets:
starting a business, dealing with construction permits, getting electricity, registering property and enforcing contracts.

The study finds that there are locations in each economy that outperform the EU average in at least one area. In Bulgaria, for
example, Varna and Pleven outperform the EU average on the starting a business indicators. This is also the case in Pecs and
Szeged (Hungary), which outperform the EU average on the dealing with construction permits indicators. All Hungarian cities
and Oradea (Romania) perform above the EU average for registering property; most locations also do so for enforcing contracts.
However, none of the subnational locations surveyed came close to the EU average on the indicators for getting electricity.

While no single location excels in all five areas covered by the study, most demonstrate a noteworthy performance in at least one
area, providing reform-minded officials with examples of existing good practices that can be replicated. For example, Bulgarian cities
could make starting a business easier by adopting the good practices observed in Varna. Cities in Hungary could make it easier to get
electricity by emulating the good practices of Szeged and Szekesfehervar. And Romanian cities could strengthen their own contract
enforcement regimes by studying the example of Timisoara. The study, which also includes comparisons with 187 other economies
worldwide, provides practical recommendations and showcases good practices for improving the business environment.

FIGURE 2.2  How Doing Business collects and verifies the data

Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct.

Questionnaire Data collection and analysis Report

development  
  The Doing Business team updates
the questionnaires and consults
with internal and external experts.
 
 
 
The Doing Business team distributes
the questionnaires and analyzes the
relevant laws and regulations along
with the information in the
questionnaires.
The Doing Business team travels to  
approximately 30 economies.
The Doing Business team engages in
conference calls, video conferences
and in-person meetings with  
government officials and private
sector practitioners.
Governments and World Bank Group
regional teams submit information on
regulatory changes that could
potentially be included in the global
count of regulatory reforms.
launch
Data verification   The report is published,
followed by media outreach
and findings dissemination.
The Doing Business team shares
preliminary information on reforms
with World Bank Group regional teams
for their feedback.
The Doing Business team analyzes the
data and writes the report. Comments
on the report and data are received
from across the World Bank Group
through an internal review process.
16 DOING BUSINESS 2018

For a detailed explanation of the Doing
Business methodology, see the data notes
at www.doingbusiness.org.
Relevant laws and regulations
The Doing Business indicators are based
mostly on laws and regulations: approxi-
mately two-thirds of the data embedded
in the Doing Business indicators are based
on a reading of the law. In addition to
filling out questionnaires, Doing Business
respondents submit references to the rel-
evant laws, regulations and fee schedules.
The Doing Business team collects the texts
of the relevant laws and regulations and
checks the questionnaire responses for
accuracy. The team will examine the civil
procedure code, for example, to check the
maximum number of adjournments in a
commercial court dispute, and read the
insolvency code to identify if the debtor
can initiate liquidation or reorganization
proceedings. These and other types of
laws are available on the Doing Business
law library website.7 Since the data col-
lection process involves an annual update
of an established database, having a very
large sample of respondents is not strictly
necessary. In principle, the role of the
contributors is largely advisory—helping
the Doing Business team to locate and
understand the laws and regulations.
There are quickly diminishing returns to
an expanded pool of contributors. This
notwithstanding, the number of contribu-
tors rose by 60% between 2010 and 2017.
Extensive consultations with multiple
contributors are conducted by the team
to minimize measurement error for the
rest of the data. For some indicators—for
example, those on dealing with construc-
tion permits, enforcing contracts and
resolving insolvency—the time com-
ponent and part of the cost component
(where fee schedules are lacking) are
based on actual practice rather than
the law on the books. This introduces a
degree of judgment by respondents on
what actual practice looks like. When
respondents disagree, the time indicators
reported by Doing Business represent the
median values of several responses given
under the assumptions of the standard-
ized case (box 2.2).

BOX 2.2 Where is the implementation of regulation more predictable and does it matter?
Doing Business measures the median duration of each procedure or process individually across the different indicator sets with
time components. However, in practice, the time it takes to complete the same transaction can differ significantly from one
entrepreneur to another. Because entrepreneurs place a premium on reliability and low risk, this variability in time can have
important implications.

This year, Doing Business sets out to better understand these differences for the eight indicators with a time component, namely
starting a business, dealing with construction permits, getting electricity, registering property, paying taxes, trading across borders,
enforcing contracts and resolving insolvency. To do so, Doing Business collected data estimating the time to complete a procedure in
both the best and worst case scenarios in an economy. The data show that in Spain, for example, a commercial dispute trial takes
280 days on average in a normal case, but can range from 180 days to 550 days depending on the individual circumstances.

The data show that—across the eight Doing Business indicators mentioned above—high-income economies have lower time
variability and, therefore, more predictable regulatory environments than low- or middle-income economies (see figure below
for an example). In addition, the data confirm that the median is very much at the center of the time distribution. In the United
Kingdom, for example, the median time for dealing with construction permits is 90 days. The worst case scenario is 120 days
and the best case scenario is 60 days, meaning that the distribution is centered around the median plus or minus 30 days.

High-income economies have the smallest difference between the best and worst case scenario time estimates
Time to start a business (days) Time to resolve insolvency (months)
25 40

35
20
30

15 25

20
10 15

10
5
5

0 0
Low income Middle income High income Low income Middle income High income

Median Difference Median Difference

Source: Doing Business database. (continued)

 ABOUT DOING BUSINESS 17

BOX 2.2 Where is the implementation of regulation more predictable and does it matter? (continued)
Doing Business data also show that the median is positively correlated with the difference between the best and worst case
scenarios (see figure below). The longer the median time to comply with a regulation, the more difficult it becomes to predict the
time needed to do so—the median becomes a measure for the unpredictability in time. In fact, economies with more variability
in time do not experience higher levels of corruption on average other than what is already predicted by the median.

In economies where it takes longer to start or close a business, the time to do so is less predictable
Median time to start a business (days) Median time to resolve insolvency (months)
120 80

70
100
60
80
50

60 40

30
40
20
20
10

0 0
0 10 20 30 40 50 60 70 0 20 40 60 80 100 120
Difference between the maximum and minimum Difference between the maximum and minimum
time to start a business (days) time to resolve insolvency (months)

Source: Doing Business database.

Doing Business respondents
More than 43,000 professionals in 190
economies have assisted in providing
the data that inform the Doing Business
indicators over the past 15 years.8 This
year’s report draws on the inputs of more
than 13,000 professionals.9 The Doing
Business website shows the number of
respondents for each economy and each
indicator set.
Selected on the basis of their expertise in
these areas, respondents are profession-
als who routinely administer or advise
on the legal and regulatory requirements
in the specific areas covered by Doing
Business. Because of the focus on legal
and regulatory arrangements, most of
the respondents are legal professionals
such as lawyers, judges or notaries. In
addition, officials of the credit bureau or
registry complete the credit information
questionnaire. Accountants, architects,
engineers, freight forwarders and other
professionals answer the questionnaires
related to paying taxes, dealing with con-
struction permits, trading across borders
and getting electricity. Information that
is incorporated into the indicators is also
provided by certain public officials (such
as registrars from the company or prop-
erty registry).
The Doing Business approach is to work
with legal practitioners or other profes-
sionals who regularly undertake the
transactions involved. Following the
standard methodological approach for
time-and-motion studies, Doing Business
breaks down each process or transaction,
such as starting a business or register-
ing a building, into separate steps to
ensure a better estimate of time. The
time estimate for each step is given by
practitioners with significant and routine
experience in the transaction.
There are two main reasons that Doing
Business does not survey firms. The first
relates to the frequency with which firms
engage in the transactions captured by
the indicators, which is generally low. For
example, a firm goes through the start-
up process once in its existence, while
an incorporation lawyer may carry out
10 such transactions each month. The
incorporation lawyers and other experts
providing information to Doing Business
are therefore better able to assess the
process of starting a business than are
individual firms. They also have access to
current regulations and practices, while
a firm may have faced a different set of
rules when incorporating years before.
The second reason is that the Doing
Business questionnaires mostly gather
legal information, which firms are unlikely
to be fully familiar with. For example,
few firms will know about all the main
legal procedures involved in resolving a
commercial dispute through the courts,
even if they have gone through the pro-
cess themselves. But a litigation lawyer
should have little difficulty in provid-
ing the requested information on all
the procedures.
Governments and World Bank
Group regional staff
After receiving the completed ques-
tionnaires from the Doing Business
18 DOING BUSINESS 2018
respondents, verifying the information
against the law and conducting follow-up
inquiries to ensure that all relevant infor-
mation is captured, the Doing Business
team shares the preliminary descriptions
of regulatory reforms with governments
(through the World Bank Group’s Board
of Executive Directors) and regional staff
of the World Bank Group. Through this
process, government authorities and
World Bank Group staff working on the
economies covered by Doing Business
can alert the team about, for example,
regulatory reforms not reported by the
respondents or additional achievements
of regulatory reforms. The Doing Business
team can then turn to the local private
sector experts for further consultation
and, as needed, corroboration. In addi-
tion, the team responds formally to the
comments of governments or regional
staff and provides explanations of the
scoring decisions.
Data adjustments
Information on data corrections is provid-
ed in the data notes available at the Doing
Business website. A transparent complaint
procedure allows anyone to challenge the
data. From November 2016 to October
2017 the team received and responded to
over 180 queries on the data.
USES OF THE DOING
BUSINESS DATA
Doing Business was designed with two
main types of users in mind: policy makers
and researchers. It is a tool that govern-
ments can use to design sound business
regulatory policies. Nevertheless, the
Doing Business data are limited in scope
and should be complemented with other
sources of information. Doing Business
focuses on a few specific rules relevant
to the specific case studies analyzed.
These rules and case studies are cho-
sen to be illustrative of the business
regulatory environment, but they are
not a comprehensive description of that
environment. By providing a unique data
set that enables analysis aimed at better
understanding the role of business regu-
lation in economic development, Doing
Business is also an important source of
information for researchers.
Governments and policy makers
Doing Business offers policy makers a
benchmarking tool useful in stimulating
policy debate, both by exposing potential
challenges and by identifying good prac-
tices and lessons learned. Despite the
narrow focus of the indicators, the initial
debate in an economy on the results they
highlight typically turns into a deeper
discussion on areas where business regu-
latory reform is needed, including areas
well beyond those measured by Doing
Business. In economies where subnational
studies are conducted, the Doing Business
indicators go one step further in offering
policy makers a tool to identify good
practices that can be adopted within their
economies (box 2.1).
Many Doing Business indicators can be
considered “actionable.” For example,
governments can set the minimum
capital requirement for new firms, invest
in company and property registries to
increase their efficiency, or improve the
efficiency of tax administration by adopt-
ing the latest technology to facilitate the
preparation, filing and payment of taxes
by the business community. And they
can undertake court reforms to shorten
delays in the enforcement of contracts.
But some Doing Business indicators
capture procedures, time and costs that
involve private sector participants, such
as lawyers, notaries, architects, electri-
cians or freight forwarders. Governments
may have little influence in the short
run over the fees these professions
charge, though much can be achieved
by strengthening professional licensing
regimes and preventing anticompetitive
behavior. And governments have no con-
trol over the geographic location of their
economy, a factor that can adversely
affect businesses.
While many Doing Business indicators
are actionable, this does not necessarily
mean that they are all “action-worthy”
in a particular context. Business regula-
tory reforms are only one element of a
strategy aimed at improving competitive-
ness and establishing a solid foundation
for sustainable economic growth. There
are many other important goals to pur-
sue—such as effective management of
public finances, adequate attention to
education and training, adoption of the
latest technologies to boost economic
productivity and the quality of public ser-
vices, and appropriate regard for air and
water quality to safeguard public health.
Governments must decide what set of
priorities best suits their needs. To say
that governments should work toward
a sensible set of rules for private sector
activity (as embodied, for example, in
the Doing Business indicators) does not
suggest that doing so should come at the
expense of other worthy policy goals.
Over the past decade governments have
increasingly turned to Doing Business
as a repository of actionable, objective
data providing unique insights into good
practices worldwide as they have come
to understand the importance of business
regulation as a driving force of com-
petitiveness. To ensure the coordination of
efforts across agencies, economies such
as Colombia, Malaysia and the Russian
Federation have formed regulatory reform
committees. These committees use the
Doing Business indicators as one input to
inform their programs for improving the
business environment. More than 60 oth-
er economies have also formed such com-
mittees. In East Asia and the Pacific, they
include Brunei Darussalam; Indonesia; the
Republic of Korea; the Philippines; Taiwan,
China; and Thailand. In the Middle East
and North Africa: the Arab Republic of
Egypt, Kuwait, Morocco, Saudi Arabia
and the United Arab Emirates. In South
Asia: Bangladesh, India and Pakistan. In
Europe and Central Asia: Albania, Croatia,
Georgia, Kazakhstan, Kosovo, the Kyrgyz
Republic, the former Yugoslav Republic
of Macedonia, Moldova, Montenegro,
Poland, Tajikistan, Turkey, Ukraine and
Uzbekistan. In Sub-Saharan Africa: Benin,

Burundi, the Comoros, the Democratic
Republic of Congo, the Republic of Congo,
Côte d’Ivoire, Guinea, Guinea-Bissau,
Kenya, Liberia, Malawi, Mali, Mauritius,
Niger, Nigeria, Rwanda, Senegal, Sierra
Leone, Sudan, Tanzania, Togo, Zambia and
Zimbabwe. And in Latin America and the
Caribbean: Argentina, Brazil, Chile, Costa
Rica, the Dominican Republic, Guatemala,
Jamaica, Mexico, Nicaragua, Panama, Peru
and St. Lucia. Since 2003, governments
have reported more than 3,180 regulatory
reforms, about 920 of which have been
informed by Doing Business.10
Many economies share knowledge on
the regulatory reform process related to
the areas measured by Doing Business.
Among the most common venues for
this knowledge sharing are peer-to-peer
learning events—workshops where offi-
cials from different governments across
a region or even across the globe meet
to discuss the challenges of regulatory
reform and to share their experiences.
Think tanks and other research
organizations
Doing Business data are widely used by
think tanks and other research organiza-
tions, both for the development of new
indexes and to produce research papers.
Many research papers have shown the
importance of business regulation and
how it relates to different economic out-
comes.11 One of the most cited theoretical
mechanisms on how excessive business
regulation affects economic performance
and development is that it makes it too
costly for firms to engage in the formal
economy, causing them not to invest or
to move to the informal sector. Recent
studies have conducted extensive empiri-
cal testing of this proposition using Doing
Business and other related indicators.
According to one study, for example, a
reform that simplified business registra-
tion in Mexican municipalities increased
registration by 5% and wage employment
by 2.2%—and, as a result of increased
competition, reduced the income of
incumbent businesses by 3%.12 Business
registration reforms in Mexico also result-
ed in 14.9% of informal business owners
shifting to the formal economy.13
Efficient and non-distortionary business
regulations are important drivers of pro-
ductivity. A study on India, for example,
shows that inefficient licensing and size
restrictions cause a misallocation of
resources, reducing total factor produc-
tivity by preventing efficient firms from
achieving their optimal scale and allowing
inefficient firms to remain in the market.14
The study shows that removing these
restrictions would boost total factor pro-
ductivity by an estimated 40-60%. In the
European Union and Japan, implicit taxes
on capital use were shown to reduce the
average size of firms by 20%, output by
8.1% and output per firm by 25.6%.15 A
recent study on Côte d'Ivoire, Ethiopia,
Ghana and Kenya demonstrates large
productivity gains following the removal
of firm-level distortions caused by
uneven regulations and a poor business
environment.16 Research also shows that
raising the efficiency level of bankruptcy
laws in select OECD high-income econo-
mies to that of the United States would
increase the total factor productivity of
the former by about 30% through a rise
in bank loans to large firms.17
Considerable effort has been devoted to
studying the link between government
regulation of firm entry and employment
growth. In Portugal, business reforms
resulted in a reduction of the time and
cost needed for company formalization,
increasing the number of business start-
ups by 17% and creating 7 new jobs per
100,000 inhabitants per month. New
start-ups were more likely to be female-
owned, were smaller and headed by less
experienced, less-educated entrepre-
neurs than before the reform, suggesting
that the reform created a more inclusive
environment for aspiring entrepreneurs.18
In many economies, companies engaged
in international trade struggle with high
trade costs arising from transport, logis-
tics and regulations that impede their
ABOUT DOING BUSINESS 19
competitiveness and prevent them from
taking full advantage of their productive
capacity. With the availability of Doing
Business indicators on trading across
borders—which measure the time, pro-
cedural and monetary costs of exporting
and importing—several empirical studies
have assessed how trade costs affect the
export and import performance of econo-
mies. A rich body of empirical research
shows that efficient infrastructure and a
healthy business environment are posi-
tively linked to export performance.19
Improving infrastructure efficiency and
trade logistics bring documented benefits
to an economy’s balance of trade and
individual traders. However, delays in
transit time can reduce exports: a study
analyzing the importance of trade logis-
tics found that a 1-day increase in transit
time reduces exports by an average of 7%
in Sub-Saharan Africa.20 Another study
found that a 1-day delay in transport time
for landlocked economies and for time-
sensitive agricultural and manufacturing
products has a particularly large negative
impact, reducing trade by more than 1%
for each day of delay.21 Delays while clear-
ing customs procedures also negatively
impact a firm’s ability to export, particu-
larly when goods are destined for new
clients.22 And in economies with flexible
entry regulations, a 1% increase in trade
is associated with an increase of more
than 0.5% in income per capita, but has
no positive income effects in economies
with more rigid regulation.23 Research
has also found that—although domestic
buyers benefit from having goods of
varying quality and price to choose
from—import competition only results in
minimal quality upgrading in OECD high-
income economies with cumbersome
regulation while it has no effect on quality
upgrading in non-OECD economies with
cumbersome regulation.24 Therefore,
the potential gains for consumers from
import competition are reduced where
regulation is cumbersome.
Doing Business measures aspects of busi-
ness regulation affecting domestic firms.
20 DOING BUSINESS 2018

However, research shows that better
business regulation—as measured by
Doing Business—is associated with high-
er levels of foreign direct investment.25
Furthermore, foreign direct investment
can either impede or promote domestic
investment depending on how business
friendly entry regulations are in the
host economy. In fact, foreign direct
investment has been shown to crowd
out domestic investment in economies
with costly processes for starting a
business.26 Another study showed that
economies with higher international
market integration have, on average,
easier and simpler processes for starting
a business.27
Recent empirical work shows the impor-
tance of well-designed credit market
regulations and well-functioning court
systems for debt recovery. For example,
a reform making bankruptcy laws more
efficient significantly improved the recov-
ery rate of viable firms in Colombia.28 In
a multi-economy study, the introduction
of collateral registries for movable assets
was shown to increase firms’ access to
finance by approximately 8%.29 In India
the establishment of debt recovery tri-
bunals reduced non-performing loans by
28% and lowered interest rates on larger
loans, suggesting that faster processing
of debt recovery cases cut the cost of
credit.30 An in-depth review of global bank
flows revealed that firms in economies
with better credit information sharing
systems and higher branch penetration
evade taxes to a lesser degree.31 Strong
shareholder rights have been found to
lower financial frictions, especially for
firms with large external finance relative
to their capital stock (such as small firms
or firms in distress).32
There is also a large body of theoretical
and empirical work investigating the
distortionary effects of high tax rates and
cumbersome tax codes and procedures.
According to one study, business licens-
ing among retail firms rose 13% after a
tax reform in Brazil.33 Another showed
that a 10% reduction in tax complexity is
comparable to a 1% reduction in effective
corporate tax rates.34
Labor market regulation—as measured by
Doing Business—has been shown to have
important implications for the labor mar-
ket. According to one study, graduating
from school during a time of adverse eco-
nomic conditions has a persistent, harmful
effect on workers' subsequent employ-
ment opportunities. The persistence of
this negative effect is stronger in econo-
mies with stricter employment protection
legislation.35 Rigid employment protection
legislation can also have negative distribu-
tional consequences. A study on Chile, for
example, found that the tightening of job
security rules was associated with lower
employment rates for youth, unskilled
workers and women.36
By expanding the time series dimension
and the scope of the data, Doing Business
hopes to continue being a key reference for
the debate on the importance of business
regulation for economic development
both within and outside the World Bank
Group (box 2.3).
Indexes
Doing Business identified 17 different data
projects or indexes that use Doing Business
as one of its sources of data.37 Most of
these projects or institutions use indica-
tor level data and not the aggregate ease
of doing business ranking. The indicator
set most widely used is starting a busi-
ness, followed by labor market regulation
and paying taxes. These indexes typically
combine Doing Business data with data
from other sources to assess an economy
along a particular aggregate dimension
such as competitiveness or innovation.

BOX 2.3 Recent Doing Business research drawing on new data from Doing Business and World Bank
Enterprise Surveys
The Doing Business team conducted several studies in 2016/17 analyzing how the current data on business regulations from
Doing Business and the World Bank Enterprise Surveys are associated with various economic and institutional outcomes. These
studies found that:

••Small and medium-size firms are more likely to be credit constrained. In addition, a more advanced credit information system
is associated with lower levels of credit constraints, particularly for smaller firms, firms that are not externally audited or
firms that lack a quality certification.a
••Fiscal pressures encourage regulatory reform. However, the effect of fiscal imbalances on reform weakens when govern-
ments can rely on low borrowing costs.b
••Service unreliability is a significant factor in low-income economies, where power outages fluctuate significantly from year
to year. Furthermore, burdensome electricity connections are associated with utility corruption and higher electricity sector
constraints reduce firm demand for energy inputs.c
••There is a significant negative relationship between corruption and firm productivity when business regulation is high, but
there is no significant relationship when business regulation is low.d
a. Chávez 2017.
b. Djankov, Georgieva and Ramalho 2017a.
c. Arlet 2017.
d. Amin and Ulku 2017.

The Heritage Foundation’s Index of
Economic Freedom, for example, has used
22 Doing Business indicators to measure
the degree of economic freedom in the
world in four areas, including rule of law,
government size, regulatory efficiency and
market openness.38 Economies that score
better in these four areas also tend to have
a high degree of economic freedom.
Similarly, the World Economic Forum
uses Doing Business data in its Global
Competitiveness Index to demonstrate
how competitiveness is a global driver
of economic growth. The organization
also uses 13 Doing Business indicators in
five indexes that measure institutions,
product market efficiency, labor market
efficiency, financial market development
and business dynamism. These publicly
accessible sources expand the general
business environment data generated
by Doing Business by incorporating it into
the study of other important social and
economic issues across economies and
regions. They prove that, taken individu-
ally, Doing Business indicators remain a
useful starting point for a rich body
of analysis across different areas and
dimensions in the research world.
NOTES
1. Djankov 2016.
2. These papers are available on the Doing
Business website at http://www
.doingbusiness.org/methodology.
3. For more on the World Bank Enterprise
Surveys, see the website at http://www
.enterprisesurveys.org.
4. For getting credit, indicators are weighted
proportionally, according to their contribution
to the total score, with a weight of 60%
assigned to the strength of legal rights index
and 40% to the depth of credit information
index. In this way, each point included in these
indexes has the same value independent of
the component it belongs to. Indicators for all
other topics are assigned equal weights. For
more details, see the chapter on the distance
to frontier and ease of doing business ranking
available at www.doingbusiness.org.
5. Hallward-Driemeier and Pritchett 2015.
6. Schneider 2005; La Porta and Shleifer 2008.
7. For the law library, see the website at http://
www.doingbusiness.org/law-library.
8. The annual data collection exercise is an
update of the database. The Doing Business
team and the contributors examine the
ABOUT DOING BUSINESS 21
extent to which the regulatory framework Imperial College London’s Digital Money
has changed in ways relevant for the features Index; International Institute for Management
captured by the indicators. The data collection Development’s World Competitiveness
process should therefore be seen as adding Yearbook; DHL’s Global Connectedness Index
each year to an existing stock of knowledge (GCI); PricewaterhouseCoopers’ Paying Taxes
reflected in the previous year’s report, not as 2016: The Global Picture; Legatum Institute’s
creating an entirely new data set. Legatum Prosperity Index; The Millennium
9. While about 13,000 contributors provided data Challenge Corporation’s Open Data Catalog;
for this year’s report, many of them completed International Civil Service Effectiveness
a questionnaire for more than one Doing (InCiSE) Index of Oxford University, Blavatnik
Business indicator set. Indeed, the total number School of Government and The Institute for
of contributions received for this year’s report Government.
is more than 16,000, which represents a true 38. For more on the Heritage Foundation’s Index
measure of the inputs received. The average of Economic Freedom, see the website at
number of contributions per indicator set and http://heritage.org/index.
economy is more than seven. For more details,
see http://www.doingbusiness.org
/contributors/doing-business.
10. These are reforms for which Doing Business
is aware that information provided by
Doing Business was used in shaping the
reform agenda.
11. The papers cited here are just a few examples
of research done in the areas measured by
Doing Business. Since 2003, when the Doing
Business report was first published, more
than 10,000 working papers and research
articles published in peer-reviewed academic
journals have discussed how regulation in the
areas measured by Doing Business influences
economic outcomes.
12. Bruhn 2011.
13. Bruhn 2013.
14. Hsieh and Klenow 2009.
15. Guner, Ventura and Xu 2008.
16. Cirera, Fattal Jaef and Maemir 2017.
17. Neira 2017.
18. Branstetter and others 2014.
19. Portugal-Perez and Wilson 2011.
20. Freund and Rocha 2011.
21. Djankov, Freund and Pham 2010.
22. Martincus, Carballo and Graziano 2015.
23. Freund and Bolaky 2008.
24. Amiti and Khandelwal 2011.
25. Corcoran and Gillanders 2015.
26. Munemo 2014.
27. Norbäck, Persson and Douhan 2014.
28. Giné and Love 2006.
29. Love, Martinez-Peria and Singh 2013.
30. Visaria 2009.
31. Beck, Lin and Ma 2014.
32. Claessens, Ueda and Yafeh 2014.
33. Monteiro and Assunção 2012.
34. Lawless 2013.
35. Kawaguchi and Murao 2014.
36. Montenegro and Pagés 2003.
37. The projects or indexes using Doing Business
as a source of data are the following: Fraser
Institute’s Economic Freedom of the World
(EFW); The Heritage Foundation’s Index
of Economic Freedom (IEF); The World
Economic Forum’s Global Competitiveness
Index (GCI); Networked Readiness Index
(NRI, jointly with INSEAD); Human Capital
Index (HCI); Enabling Trade Index (ETI); Travel
and Tourism Competitiveness Index (TTCI);
INSEAD’s Global Talent Competitiveness
Index (GTCI); Global Innovation Index (GII,
jointly with Cornell University and the World
Intellectual Property Organization); KPMG’s
Change Readiness Index (CRI); Citi and